The cost of an MBA is on a steady climb

The average cost of an MBA at Australian universities has risen by about 3 per cent in real terms in the last six years, according to a new analysis.

“The reason is that costs have increased tremendously," said
Alex Frino
, dean of the Macquarie Graduate School of Management, who compared MBA fees in 2007 and 2013, as recorded by the Good Universities Guide.

Professor Frino said the three main areas of cost increase for business schools in that period were wages, new technology and rent.

He said that staff costs had increased tremendously, with top business schools operating in a global employment market and generally offering pay rises above the level of the university-wide academic staff enterprise agreements.

Business schools were not gouging, Profess Frino said, because the fee rise reflected the increasing cost of delivering a quality MBA.

With 14 business schools now ­having globally recognised accreditation with AACSB or Equis, the cost of this stamp of quality is also adding to fee rises.

It costs a business school about $1 million to go through the accreditation process, including paying for staff time to complete the auditing and documentation which is required.

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“The type of staff you need in order to be accredited are much more expensive," Professor Frino said.

Accreditation means a business school has to have staff with PhDs who are research active, and it also means a level of business engagement needs to be maintained.

In addition there are processes which the business school must follow in its administration and student record keeping, all of which add to costs.

“I don’t think it’s a bad thing; it’s a good thing because it increases the quality of what we deliver," Professor Frino said.

He also said that the cost of technology had risen by over 300 per cent between 2007 and 2013, to become a major cost. The shift came about because business schools needed to deliver on students’ expectations for availability of technology, and they also had to respond to the rising use, and popularity, of online learning.

During these six years there was a small fall in numbers of students studying MBAs, down 6 per cent from about 21,300 to about 20,000.

In individual business schools prices changes varied considerably from 2007 to 2013 as different business strategies were tried to draw in students.

A handful of business schools reduced the cost of their MBA. ­Swinburne University reduced its MBA fee by an average of 2.8 per cent a year, and the University of Newcastle by an average of 1 per cent a year.

However, there are also a number of business schools which increased their MBA fee considerably – on average above 10 per cent a year.